Suzuki Departure Not Surprising in Competitive US Market

A Suzuki Splash car sits on dislay at the Paris Motor Show on September 28, 2012 in Paris, France.

In the auto business, America is the ultimate arena. It is the most lucrative major market in the world. It may also be the most competitive.

That competition has claimed another victim, or in this case, another auto brand.

Suzuki, which has struggled for years to be a player has filed for Chapter 11 bankruptcy and will no longer sell cars in the U.S. The move says as much about America's shrinking auto market as it does about Suzuki.

Fewer Brands, Fiercer Competition

Once Suzuki pulls out of the U.S. it will join a growing list of brands that are no longer around in America. According to Autodata, there were 42 brands being sold in the U.S. in 2007. After Suzuki folds up operations, that number will be down to 37.

The brands that have disappeared include:

Hummer

Saab

Saturn

Pontiac

Mercury

And soon Suzuki

Cynics say the list is more indicative of the American auto industry nearly collapsing a few years ago and is less a reflection of the American market shrinking. I don't buy that.

In my opinion we're headed for a U.S. market with fewer auto brands, where the weak either go out of business or pull out all together.

Look at Suzuki. This year it has sold 21,188 vehicles in the U.S. The only major non-luxury brands it has outsold are Saab and Smart. Mass brands cannot thrive at that level.

Chinese Brands Watching

The demise of Suzuki is being watched closely by Chinese automakers like Geely and Chery, two brands that have designs on ultimately entering the U.S.

Why aren't they here yet? They're not ready. Executives at both companies know they will face intense scrutiny when they finally decide to sell models in America. If Geely and Chery were to come in with vehicles that had poor reliability, American buyers would dismiss them.

That has long been an issue for Suzuki. It's not considered a leading brand. In this market, brands struggle unless that can hang with leaders. They may not win the sales race, but at least they'll be competitive and attract buyers.